As the name implies, service tax is a tax levied on all tariffs. That was the tax levied by the central government on facility transactions in 1994 according to the financial law. Indirect tax(similar to consumption tax or sales tax), the service provider pays the tax and recovers the amount from the recipient as tax work.
The service tax is usually recovered by the assessor in two ways.
• Use the same form of credit card as Cenvat credit card
• By requesting a refund.
The assessed taxpayer may adjust the amount of tax paid in the subsequent period and use the excess tax paid. If the service tax cannot be adjusted by itself, the assessed person may request a refund.
Service tax refund usually occurs in export-oriented companies(STPI, SEZ, EOU units), because the government usually does not levy taxes, but promotes exports. These companies pay consumption tax to support the purchased input/output, but do not receive unpaid money when exporting services, so they cannot use Cenvat credit. Therefore, these companies have to choose to reduce or exempt the refund application procedure of unused cenvat(tax).
Export oriented units, especially STPI units, have encountered many obstacles and difficulties in applying for refund of service tax. In considering the refund application, due to various reasons of the designated authority, excessive delay occurred. The main reasons for rejecting the claim amount are as follows:
• Tax refund application period.
• The date associated with the calculation limitation period associated with the submission of the refund request.
• The meaning of the principle of unjust enrichment.
• When goods and services are exported separately, a separate Foreign Exchange Remittance Certificate(FIRC) is required. Public utilities
• Submit original documents such as invoices, bills of lading, SB, BRC, etc.
Central Taxation Bureau; the Customs is dealing with this issue and regularly explains it through various explanations/notifications. These explanations/notifications include a number of procedural issues regarding the refund of service tax paid. It solved many problems such as the submission time of refund application, accepting the copy of valid document certification, submitting self certification statement and FIRC.
although the department has taken various measures, the tax refund has not been resolved. The main reason is that the documents of the indemnifying party are incomplete, the actual review process of the documents submitted to the department is cumbersome, and the indemnifying party and the department have different views on the acceptability of the input services that meet the tax refund conditions.
New Delhi has many professional tax consultants to help solve the tax problems faced by the company. However, it is always wise to conduct careful research before contacting the STPI consultant in Delhi.
